Jury: Allentown owes contractor nearly $1 million

Panel also finds city showed 'bad faith' by withholding payments almost two years.

February 07, 2013|By Kevin Amerman, Of The Morning Call

A Lehigh County jury has ordered Allentown to pay a contractor nearly $1 million for hiring the company to build a road without telling it the land was contaminated with arsenic, breaching their contract.

The jury ruled that Allentown must pay A. Scott Enterprises $927,299. The verdict was reached Jan. 31 but wasn't entered as an official court document until late Thursday afternoon.

The Saylorsburg company argued that the discovery of the arsenic — a toxic chemical element that can cause illness and even death — stalled the East Side project and prevented the company from committing to other jobs.

The company said the city wouldn't agree to cover the additional costs necessary to build on the arsenic-laced soil.

In its lawsuit, A. Scott Enterprises said Allentown violated its contract by failing to disclose the presence of arsenic and suspending work for nearly two years while refusing to pay costs incurred during that time.

The jury found Allentown breached its contract and "caused damage" in the amount of the award. In addition to setting damages, the jury ruled the city operated in "bad faith" by withholding payments.

The company's attorney, Paul Logan, said the bad-faith finding allows him to petition Judge Michele A. Varricchio for attorneys' fees and other legal costs that could reach $400,000.

The lawsuit, filed in August 2011, claimed A. Scott Enterprises had lost more than $2.89 million since it signed a $2.9 million contract in October 2009 to build New England Avenue, a new two-lane road connecting Hanover Avenue and N. Dauphin Street on the former Lehigh & New England Railroad right-of-way.

The road still hasn't been built.

Allentown Communications Coordinator Mike Moore did not return a phone call seeking comment on the verdict. He offered a prepared statement, which says in part:

"While the city respects the rule of law and the jury process, the city strongly maintains that it acted properly as a steward of the environment while also properly safeguarding use and care of federal, state and city taxpayer funds. The city is examining all avenues of appeal at this time, as well as all of its options to complete New England Avenue as expeditiously as possible."

The city on Wednesday filed a motion for post-trial relief, claiming Varricchio erred in permitting unqualified witnesses to testify as experts. It also says the jury was allowed to consider insufficient evidence.

The city claims A. Scott Enterprises breached its contract by not completing the work and is asking Varricchio to grant the city judgment based on breach of contract or order a new trial. The jury determined A. Scott Enterprises did not breach the contract.

The company's lawsuit said that throughout the delay, the city failed to address the risk of residential neighborhood contamination through wind-scattered arsenic dust or storm-water runoff.

Moore, in his prepared statement, maintained "the soil contamination was at levels that were below the environmental standards for industrial sites."

He said all environmental issues were addressed with experts, including the state Department of Environmental Protection and the Department of Transportation. Moore said a dispute arose over the "direction and methods to resume construction."

According to the lawsuit:

In November 2009, while A. Scott Enterprises was cleaning the site, an unnamed city contractor told the company that the soil was contaminated with hazardous materials, despite the fact none of the project information showed there was any hazardous material on the site.

The company obtained a Feb. 26, 2008, report that said a portion of the roughly 50,000-square-foot site had levels of arsenic above the residential limits set by the DEP.

After A. Scott Enterprises confronted the city with the report in November 2009, city officials suspended site work indefinitely.

The company then commissioned its own hazardous materials report, which found the levels of arsenic would require special handling and protective measures, especially during excavation and piping.